Are Economists Cheap? Or Do We Just Believe in Comparative Advantage?

The front page of Saturday’s Wall Street Journal tells us that “Economists are cheapskates.” The article by Justin Lahart is hilarious, recounting the foibles of those of us who sometimes take our classroom lessons about economizing a step too far — particularly when it comes to economizing on time.

I laughed particularly hard when I read this:

Stanford University economist Robert Hall, incoming president of the American Economic Association, values his time so highly that his wife, economist Susan Woodward, occasionally puts her foot down. “Bob doesn’t see why we can’t just hire people to trim the Christmas tree,” she says. “I tell him that’s not what it’s supposed to be about.”

I sent Bob a quick email to tell him that I’m on his side on this one. But he was having none of my solidarity — he reckons the Journal owes him a correction. In fact, he even told me what he hoped for:

Economist Robert E. Hall has never sought hired help to trim the tree. He has never even considered the idea. This year, he did the whole job himself, beautifully, with no help from his relatives or friends. The WSJ‘s report that he wanted hired help was based on erroneous information provided by Susan E. Woodward.

Even if Bob is not guilty this year, I still reckon he’s probably guilty, at least in his heart. Perhaps he just thought it and didn’t say it; perhaps he was guilty last year; or perhaps he’s been guilty of related sins in the past.

Why am I so confident? It’s just how economists think. Alan Blinder has said that he wouldn’t trust an economist who mowed his own lawn, because it reveals that they don’t believe deeply in the principle of comparative advantage. And what goes for mowing your lawn surely holds equally for trimming the tree.

Perhaps not. Ed Glaser has recently argued that we economists should stop being so Grinch-like. Ed reminds us that some traditions are more about meaning than deadweight loss triangles.

O.K., time to ‘fess up. I laughed about Bob Hall’s alleged Christmas request because I really did ask Betsey if we could hire someone to trim our tree for us. Yes, I do believe in comparative advantage, and I figure that I’m more efficient at other things. But she’s a step smarter than my simplistic analysis, and at her insistence, we not only trimmed the tree, but we also enjoyed it (and indeed, we enjoyed it more than the next-best use of our time, leading to the conclusion that I have a comparative advantage at tree trimming).

Of course, when it comes to dismantling the tree, there’s no special meaning attached. And so, following these same principles of comparative advantage, Betsey and I have hired someone to strip the tree. The time we saved meant that we could spend more time in Atlanta, enjoying the very same meetings of the American Economic Association that Bob Hall did such a splendid job organizing. A feat even more impressive, in light of his onerous Yuletide burdens.

COMMENTS: 33

I’m surprised most economists wouldn’t just go for the fake, pre-lighted trees that are now available. They look much better than 20 years ago and take little time to set up. Plus, the price has fallen substantially. I’d imagine the payback period is two years (especially if you are hiring someone). Your hedonic value for a real tree is extremely high perhaps?

I see this as a time-saving, technological advancement that many (though apparently not other economists, besides myself) have adopted. The time benefits (e.g. setup, cleanup of needles, etc.) outweigh the loss of not having a real tree (e.g. smell, status signaling) in my opinion.

I read the article this weekend and told my wife, “See, this is why economists will never run the country and why we should be happy about it. Now if only lawyers would adopt dislike-able, credibility destroying habits, we’d be fine.”

Just because some lawn mowing professional has a comparative advantage, doesn’t mean that its rational not to mow your own lawn. An economist may have little opportunity cost in taking the hour to mow their lawn and therefore is “earning” what they would have otherwise spent and utilizing what would have been wasted time. Also lawn mowing may provide time for the economist to think their big economist thoughts, which also eliminated the opportunity cost.

Why not trust an economist who mows their own lawn? Maybe the exercise, sun, and misc other benefits they get from it is more than what they might get from doing an additional regression. Marginal utility, perhaps? Same goes for almost everything.

I don’t think economists are cheap… just rational. If you don’t have the comparative advantage in something why would you do it if someone can do it faster, better, and more efficiently? You could spend the time gained doing something that actually appeals to you.